Ron lost $20 playing the slots in Atlantic City.However,he found $20 on the subway.Even though Ron comes out even in terms of cash,he still feels pretty badly about losing money in the slot machines.In fact,he actually feels neutral about finding the $20 on the subway.Ron's feelings can be explained best by ____.
A) the gambler's fallacy
B) expected value
C) utility
D) loss aversion

Question

Quizplus · Accepted Answer

Ron's feelings are consistent with loss aversion, which refers to the tendency for people to experience the pain of losses more acutely than the pleasure of gains. Even though he comes out even in terms of cash, he still feels bad about losing money at the casino. His neutral feelings about finding $20 on the subway suggest that he is not experiencing the pleasure of gains to the same degree as the pain of losses.

Ron Lost $20 Playing the Slots in Atlantic City